On the edge of a lush, well-tended park, palm trees swaying in the evening breeze, a small delegation of demonstrators silently clutched candles as they condemned the bloodshed in Gaza. Their vigil was watched benignly by clusters of policemen strategically grouped nearby; passing pedestrians and drivers offered words of support and condemnation in equal measure – and within an hour the protest had run its course and disbanded.

On the face of it, last night's show of solidarity for Gaza epitomised Israel's commitment to free and fair expression for all its citizens, but the reality behind the mask tells a very different story. This was Jaffa, after all, a largely Arab city on the edge of Tel Aviv, where the locals find themselves in a precarious position at the best of times, and even more so when the country is firmly on a war footing.

Seven days ago, I attended a protest at the same spot, which boasted a far larger – and far more vocal – crowd than last night's vigil: scores of demonstrators loudly denouncing Israel's leaders as war criminals, rowdy brandishing of incendiary placards and flags, and a proud mixture of Israeli Jews and Arabs joining forces to voice their opposition to the war.

However, a week is a long time in internal Israeli politics, during which time several local Arab activists were arrested on trumped-up charges and held in jail, purportedly to prevent them carrying out future acts of sedition. Their detention served to scare off not only them from attending subsequent demonstrations, but also their friends, families and the rest of the Jaffa community, leading to the sharp drop in attendees at last night's protest.

"It feels like old-school state intimidation," said one man who braved the threat of arrest to show his support for yesterday's vigil. "What's worse is that Israel trumpets itself as a democracy, yet takes measures such as these [to stifle dissenting voices]. At least in places like Syria, the public aren't fooled into thinking their rulers are in any way democratic."

He described the reaction he had encountered when handing out leaflets advertising the demonstration to fellow members of the community: "People are frightened to come, and there's nothing we can say to convince them differently. We can't tell them they won't be arrested, since the evidence of the last week proves otherwise." He told me that stop-and-search tactics have increased in the area since the outbreak of hostilities in Gaza, adding to the sense of state-sponsored pressure on the local Arabs.

Yesterday, at the same time as the watered-down vigil was taking place, Israel's Central Elections Committee upped the ante in the anti-Arab stakes, banning two Arab political parties, Balad and UAL, from running in the upcoming general election. After two petitions claimed that Balad's and UAL's political platform aimed to undermine Israel's existence as a Jewish, democratic state, and that the parties were supporting armed struggle against Israel, the committee voted decisively to kick them out of the electoral race.

Balad's chairman Jamal Zahalka was defiant in the face of the committee's stance, declaring that "Israeli democracy, not Balad, is being put to the test today. Balad is a democratic and progressive party, and we believe in the basic principle of equality for all people. All we demand is democracy! What are you afraid of when we ask for equality? We are the sons of this country, we were born here and we are willing to treat you with equality, so why don't you?"

UAL chair Ahmed Tibi was equally scathing in his attacks on the Israeli government, asserting that "Any vote given to Kadima is a bullet in the chest of a Palestinian child in Gaza." He had short shrift for those accusing his party of undermining the Israeli status quo: "We never said that we don't recognise the state of Israel. We are part of it, but we will never accept Zionism, which is an ideology that aspires to banish us from our homes."

While appeals are expected to be lodged in the Israeli high court of justice by the suspended parties' chairmen, Zahalka maintained that the damage had already been done, predicting that the move would lead to a deeper crisis between the country's Jewish and Arab citizens. There is little doubt that he is right on that front; the already-strained relationship between Israel's Jews and Arabs has now suffered two body blows this month alone, in the shape of the Gaza offensive and, now, the clampdown on Arab political activity.

Whether on the balmy streets of Jaffa, or in the upper echelons of Israeli officialdom, the message appears to be the same: if you raise so much as a murmur of dissent in a time of war, the strong arm of Israeli law will come crashing down and stifle your protests in a flash. Israel's boast that it is the "only democracy in the Middle East" rings more hollow now than ever before.